This proposal is on revenue allocation and political
stability in Nigeria focusing on the impact of revenue allocation on the
political stability in the development of the national economy and problems in
revenue allocation like military interventions and other political insets which
effort economic growth.
It has a number of objectives, which are as follows;
To determine the basis for revenue allocation.
To effect the revenue allocation formula on economy.
The contribution of revenue allocation to the development of the
To guide the work appropriately, a number of
hypotheses are going to be formed which includes;
Do revenue allocation issues contribute to political instability in
Is revenue allocation to the development of the economy?
Do revenue allocation formula adversely affects the economy of the
The work will target at examining the revenue
allocation with a view of fully appreciating its impact on political stability
of the nation. It will also review briefly some past revenue allocation
principles in order to place this work on the proper historic perspective.
The work will go a long way in contributing through
analytical review of revenue allocation formula and the impact it has on the
political stability of the economy. The success recorded in achieving the
objectives of investigating the revenue allocation and political stability in
Nigeria economy, point at the importance of the fact aspect of political
economic management function of the government, which have appeared to be
neglected by Nigerians.
The topic will elicit this strong point, that all
economic development is anchored on efficient development and management if its
resources including its revenue.
An efficient development and allocation of revenue
to the feature of production through the government will definitely proper the
nation’s economy to greater productivity, thereby enhancing economic
development as political stability in the economy.
Indeed the Nigeria political economy sustained a
fragile stability and confronts and undermines political future. A future
dominated by a society and resolution of rising expectations. A fundamental
problem of political system is to control and to direct the process of change.
However, political strategy will offer view economic
opportunities and varied cultural experience intellectual stimulation through
sufficiently adaptable, complex, autonomous and coherent to absorb order and
the participation of groups to promote social and economic changes in the
Development, the essential quality of modest lies in
the character and direction of change. This change invariably not merely the
will but the capacity to absorb change such that it does not undermine stability
as to present the development of the institutional capacity, fulfill
Finally, I will enjoin the government to note all
the recommendations. I will make because it is going to be a direct outcome of
the study. The implementation of the most pertinent recommendation will
contributes towards a more stable political society in our developing economy.
CHAPTER ONE: Introduction
Brief Review of the Nigerian Experience as
a Nation State
The Various Sources of Revenue to the
The Need/Basis of Allocation of Revenue
Statement of Research Problem
Purpose of the Study
Statement of Hypothesis
Significance of the Study
Scope and Limitation of the Study
Definition of Terms
CHAPTER TWO: Literature Review
Definition of Revenue Allocation
Definition of Political Stability
Various Methods of Revenue Allocation
Various Methods have help in Bringing about Political Stability or
Other wise in the Past
Criteria in use for Revenue Allocation
2.6 A Review
of Federal Revenue Share 1992 – 1995
2.7 A Review
of State Revenue Share 1992 –1995
2.8 A Review
of Local Government Revenue Share 1992 –1995
Issues in Revenue Allocation 1999 Constitution and Newly
Proposed Revenue Allocation
CHAPTER THREE: Research
Secondary Data Sources
Statistical Method Used
CHAPTER FOUR: Data Presentation and Review of Pre-independence Revenue Sharing
4.1 1946 Revenue Allocation Formula
4.2 1957 – 1958 Revenue Allocation Formula
4.3 1963 – 1964 Revenue Allocation Formula
4.4 Review of 1989 – Revenue Sharing Formula
4.5 Review of 1995 Revenue Sharing Formula
4.6 Hypothesis Testing
5.4 Area of
1.1 BRIEF HISTORY OF THE NIGERIAN EXPERIENCE AS
A NATION STATE
To highlight some significant event and developments
in response to a review of Nigeria experience as a nation state, it is
intellectual to present a brief survey of the part to understand the distinct
phases through which the nation passed to arrive at its present political state
and economic condition vis-à-vis revenue allocation. Some of these historical
periods have enjoyed such a degree of political stability that in reference to
revenue allocation and political stability, not only were great or studies made
in the promotion of social and economic development, the overall smoothness in
the functioning of the governmental system at both the regional and federal
levels over shadowed the negative consequences of the power struggles and by
the late 1950’s a myth of Nigeria as a “stable democracy” enjoyed considerable
The introduction of modern methods of governance on
a gradual pace in what could be described as a semi- federal and
quasi-democratic structure of 1946 Nigeria, like a newborn baby of the British
colonial administration passed through various developmental phases of
political growth. By 1957, the political structure has developed into a
well-structured democratic federal political process upon the background and
modern political process was set Nigeria; in 1979, the constitution of the
federal republic of Nigeria provided for a democratic federal structure in the
In this study, it is observed that the introduction
of system of revenue allocation in the Nigeria political economy dates bank to
the political development of 1946. It is note worthy to state that the revenue
allocation system in the political process had indeed been accompanied by
constitutional changes over the decades. These suggest that the constitution
provides the essential political environment in a nation state.
It is significant that while the constitution
emphasis national unity with its concomitant principles of deviation,
population and equity of state in revenue allocation, to some observer such
constructional provision were not borne out of a true desire for national unity
The revenue allocation issue in the political
economy of Nigeria is a volatile as any other national question such a
population. This means that how national revenue is shared among the different
component political units of the federal structure is irretrievably tied to the
national question. Hence no broadly acceptable national revenue allocation
formula has been had since 1947 and which has not generated controversy but had
to be made acceptable “in the interest of national unity”.
Since 1947, about thirteen (13) formulas have been
devised for the sharing of national revenue. Everybody has formed none
satisfactory and such each one has generated more controversy than the last
The politicians through their activities in the
revenue allocation agitation and ensuring power struggle aroused the suspicion
of the source but visibly political
military to hostility in a military fashion and cash in one invitation to seize
power in the country public opinion on national consciousness believed that the
national interest has debased by the politicization of the revenue system
sharing. Its outcome becomes the breakdown of the common national spirit action
Thus, the Nigeria economic development through
nationalism was scarified on the alter of ethnic and states power politics.
1.2 THE VARIOUS SOURCES OF REVENUE IN THE
Revenue generation efforts by government have been
from various sources. However, there could be classified into 2 main sources of
revenue in Nigeria. There are the oil and non-oil sources. Over the year, prior
to 1973, the revenue from non-oil source contributed to sixty percent of the
federally collected revenues but from 1973 to now the contribution from the
non-oil sources have reduced drastically. This invariably makes may for the oil
sources to generate a major share of the government revenue.
Foreign exchange earnings from export of
agricultural commodities such as cocoa, palm produce, rubber, groundnut e.t.c.
as major sources of foreign exchange earning and government revenue.
The federal constitution of Nigeria, provides that
all revenue collected under federal laws be known as federally collected
revenue and paid into federation account and distributed to the federal, state
and local government according to the existing revenue allocation formula.
The revenue of government comprises of the following
SOURCE: OIL REVENUE
Petroleum profit tax
Rent, royalties and NNPC
National Economic New Structure Fund (NENSF)
Company income tax
Capital gain tax
Personal income tax
License fee on television and wireless radio
Sales or purchase tax (now value added tax)
Football pools and other betting taxes
Motor vehicle tax and driver license fees
Land registration and survey
Market and trading license fees
Motor park dues
Land ground rent fees
1.3 THE NEED/BASIS FOR REVENUE ALLOCATION
In the light of presentation and deliberation
between the various levels of government, federal state and local government
and the need to ensure that each tier of government in the federation has
adequate revenue to enable it discharge its function as laid down in the
constitution. Therefore in determining what proportion of the national revenue
often referred to as federation account that should go to my tier of government
for the discharge of the constructional functions, it will be ideal to first
demarcate these functions, as may be laid down in me constitution for each tier
of government, identify also the appropriate level of service to be performed
by each tier determine what should be the cost to perform efficiently at that
level and therefore add up the financial requirements for each tier should then
yield the relative weight in financial terms of the function laid down by the
constitution. With these fact on hand, the three tiers of government in
proportion to these relative weights. It follows that for effective
distribution of national revenue; basic broad guidelines or the distribution of
the revenue among the three tiers of government becomes necessary and must be
strictly adhered to.
1.4 STATEMENT OF THE RESEARCHERS
There are problems with devising a scheme of revenue
allocation that is nationally understood and widely accepted as equitable, over
the years various formula as many as thirteen have been tested and each has
received some criticism and resentment from some quarters of the nation state.
1.5 PURPOSE OF STUDY
The work aims at examining the revenue allocation
with a view to fully appreciating its impact on political stability of the
This work also reviews briefly some past revenue
allocation principles in order to place this work on the proper historical
1.6 STATEMENT OF HYPOTHESIS
Base on the problem and objective of this study the
following hypothesis is proposed.
revenue allocation issue contribute to political instability in Nigeria?
revenue allocation problem the only issue that led to political instability in
revenue allocation problem caused by lack of awareness or
on part of Nigeria as to the actual revenue allocation formula?
the criteria of revenue allocation the most equitable in Nigeria?
the revenue allocation formula adversely affect the economy of the country?
the plans to increase the revenue allocation sources of the economy a means to
increase available for the achievement of greater national development?
SIGNIFICANCE OF THE STUDY
Having clearly identified the problem of sharing the
revenue accruing to the nation state of Nigeria. The search of solution should
start with making tireless efforts to educate the people to understand the
principle and to be reasonably flexible in formulating the underlying formula
for the distribution of revenue among the differed level of government, the
three tiers of government in an acceptable manner in order to promote national
unity through common hitherto.
1.8 SCOPES AND LIMITATION OF STUDY
This study was not carried out without some
constraint. Many factors have handicapped and hindered the research from
meeting up with the research among the factors are;
COST: For total accomplishment of
the objective of the study to be achieved, the demand is much more costly than
the researcher could afford.
TIME: While carrying out the study of this
magnitude, it requires more time than that which was given to the researcher
and this was serious limitation on the researcher work.
The attitude shown towards scholars and researchers is discouraging. In the
course of gathering data for this study, some responds showed great apathy in
releasing information thereby reducing the possibility of eliminating bias.
PROGRAMME AT THE TIME OF STUDY
A student researcher aimed this study out; following
this at the time of this study, there was a lot of disruption of academic work
and as a result, the motivating factors and joy that follow researching wasn’t
1.9 DEFINITION OF TERMS
Certain usage are explained us they apply to the
revenue allocation and political stability discussed in the research work.
The term “political process” refers to what general
takes place between leader and those they lead. It deals with aspect of relationship
between human being, particularly, which have some direct bearing of authority
within a community. It involves the use of discussion, criticism, negotiation
confrontation, alliance, competition, choice and co-operation as various ways
of seeking individual and community goals.
By revenue it refers to the return field on source
of any land property or the other important sources of income.
Principles of allocation refer to the rules to be
applied on general law to be applied in the allocation of revenue. “Criteria”
means the stand and by which to Judge the allocation for the criteria to be
applied, there need to know the purpose of the allocation, which shift
financial resources from one fiscal unit to the other.
Political system can be described as the interaction
to be formed all independent societies, which performs the functions of
interrogation, and adoption – both internally and vis-à-vis other societies by
means of the employments of, or threat of employment more or less legitimate